Why Capital Budgeting?
As many of you may know, the private sector has gone through a wrenching process of re-engineering and downsizing over the past 15 years. Virtually every business has had to reassess its mission, priorities, and the ability to deliver a required level of goods and services at a lower cost and with greater efficiency. Those of us in the corporate financial community know how critical and painful this process can be. We had to do it because of the efficient laws of survival in the global marketplace. During this period of multi-billion dollar budget surpluses, we strongly recommend that the Federal government emulate the private sector experience. Central to private sector re-engineering has been employment of a highly disciplined mission definition and capital allocation process conducted in a prescribed cycle schedule. Pivotal to these efforts is the commitment to long-term fixed assets which will drive much of the operating budgets of future years. The importance of capital budgeting
